8 Ways Companies Manipulate Profits

Опубликовано: 21 Октябрь 2024
на канале: Edspira

4,139

328

Here are 8 ways companies manipulate their profits:
1. Aggressive revenue recognition - The company records a fictitious sale or records a legitimate sale too soon.
2. Improper capitalization - The company converts a routine expense into an asset, spreading the cost over multiple periods.
3. Changing accounting methods - The company switches from LIFO to FIFO.
4. Changing estimates - The company changes the estimated useful life and salvage value for fixed assets, spreading the cost over a longer period of time and boosting profits today.
5. Changing the timing of events - The company sells an investment with an unrealized gain.
6. Altering business decisions - The company slashes R&D or postpones maintenance on equipment to make the company appear more profitable.
7. Related-party transactions - The company inflates profits through sham transactions with related parties.
8. M&A - The company frequently engages in acquisitions and pressures target firms to shift profits from the pre-merger period to the post-merger period.
So there you have it; 8 ways companies manipulate profits.
#shorts
—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
http://eepurl.com/dIaa5z
—
SUPPORT EDSPIRA ON PATREON
*  / prof_mclaughlin
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
Apple Podcasts: https://podcasts.apple.com/us/podcast...
Spotify: https://open.spotify.com/show/4WaNTqV...
Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
  / prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
Facebook:   / edspira
Instagram:   / edspiradotcom
LinkedIn:   / edspira
—
CONNECT WITH MICHAEL
Twitter:   / prof_mclaughlin
LinkedIn:   / prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
https://www.edspira.com/about/
https://michaelmclaughlin.com